koss corporation: how $34 million disappeared
These risks refer to a specific weakness of the organization in embezzlement, Koss’s audit fees were reduced by half from $114,900 From 1992 to 2009, Sachdeva was the Principal Accounting Officer, Secretary, and Vice-President of Finance at Koss. ownership interest in Hawaii, a Mercedes Benz, and other Koss Corporation is a publicly traded company that designs and sells stereo headphones. In her last … According to the SEC, Sachdeva authorized at least 206 wire transfers of funds from Koss bank accounts to pay for her American Express credit card bills and issued more than 500 cashier’s checks from company accounts to pay for personal expenses. Why or why not? In December 2009, former vice president of finance Sujata "Sue" Sachdeva was charged in federal court with wire fraud after the firm discovered her embezzlement of $34 million. According to the SEC, Sachdeva The plea deal estimates the loss to Koss at $34 million; it also states that the government can prove, and Sachdeva agrees, that the criminal conduct involved from $20 million to $50 million. Koss Corporation: How $34 Million Disappeared. Julie Mulvaney, the Company’s senior accountant Koss was forced to restate five years of financials. for personal expenses. outside auditors. Her attorney claimed that authorized at least 206 wire transfers of funds from Koss bank Sachdeva had gone on a frenzied spending spree with the stolen funds, purchasing expensive clothing, jewelry, and other goods in such volume that she needed to rent a storage space. Sachdeva, a former executive at Koss Corporation, admits stealing $34 million from the Milwaukee headphone maker, but she blames it on mental illness. In developing an understanding of the entity and its environment the auditor from MGT 278A at University of California, Riverside was a small company, Koss was not subject to a section of the Koss is the Milwaukee-based,mostly privately held small company that’s a prominent global designer and marketer of stereo-phonic headphones. The six felony fraud counts carried a max- So their net worth went up 50 fold, and their earnings are nothing. have been remarkably relaxed and its corporate board rarely in 2007 to $63,600 in 2008. Sachdeva used the embezzled funds to sustain a lavish lifestyle including purchasing a vacation ownership interest in Hawaii, a Mercedes Benz, and other automobiles. Welcome! • Koss Corporation’s control environment appears to have been remarkably relaxed and its corporate board rarely changed. ∙ Koss did not have an internal and numerous personal items, including luxury clothing, furs, Koss Corporation: How $34 Million Disappeared. "Sachdeva out of prison after serving six years for stealing $34 million from Koss Corp". (Refer back to Problem 4-33 for the basic facts on the Koss Corporation embezzlement.) She explained her life style by stating that her husband earned a couple of million dollars a year and that they both came from wealthy families. The chief financial officer of the Milwaukee headphone company Koss Corp. will retire later this summer. Koss Corporation is a publicly traded company that designs and sells stereo headphones. Assume that you are a member of the audit team. ↑ "Ex-Koss exec gets 11 years for $34 million embezzlement". The massive misappropriation was ultimately | Koss was forced to restate five years of financials. Such purchases Koss Corp. said Friday that it has settled its lawsuit against American Express Co. related to the embezzlement of $34 million of Koss funds by a former … Koss recently announced the settlement of a lawsuit against American Express for $3 million. Koss Corporation is a publicly traded company that designs and sells stereo headphones. © 2003-2021 Chegg Inc. All rights reserved. The Koss family controls a majority of the Company’s stock. were being wired from a Company bank account to pay for expenses on In December 2009, former vice president of finance Sujata "Sue" Sachdeva was charged in federal court with wire fraud after the firm discovered her embezzlement of $34 million. • In 2006, Sachdeva co-chaired a fundraising gala for Big Brothers Big Sisters with one of Koss’s outside auditors. couple of million dollars a year and that they both came from Auditing & Assurance Services: A Systematic Approach | 10th Edition, Auditing & Assurance Services: A Systematic Approach. embezzling $34 million from the Company. account. She was released in 2017 after serving six years. protecting the frauds coming from different sources. • Michael Koss simultaneously held 5 senior management positions: Vice Chairman, Chief Executive, Chief Operating Officer, President, and Chief Financial Officer. your password 2:11-cv-00991, USDC, E.D., Wise. In a multi-year scheme, Sachdeva was ultimately arrested by the FBI and sentenced to 11-years in prison in 2010 (she served 6-years), with all of her ill-gotten property forfeited. wealthy families. (The investigation only covered five years, but the total longevity of the fraud was allegedly 12 years.) From 1992 to 2009, Sachdeva was the Principal Sachdeva attempted to conceal the identities of the recipients of the checks by using acronyms on the checks such as “S.F.A. Julie Mulvaney, the Company’s senior accountant who was responsible for making journal entries, reconciling accounts receivable, reconciling the Company’s bank statements, ordering cashier’s checks, processing wire transfers, and checking the daily bank account balances assisted Sachdeva in covering up the fraud.